Autonomous Autos – Shaken not stirred.

The shake-out begins.

• I suspect that Aurora will regret rebuffing VW’s attempts to acquire it as the loss of this key partner is likely to make life very difficult for this also-ran of the autonomous driving industry.
• Aurora is just one of many who I think are already struggling, meaning that the inevitable shake-out that is coming, may already be starting.
• The first signs of this appeared last week when it transpired that Apple is considering an acqui-hire of Drive.ai (see here) which has been for sale for some time and has not attracted much interest.
• VW and Aurora have had a partnership for some time where the idea was that VW would get access to the self-driving technology it lacks and Aurora would get pretty much the best route to market it could hope for.
• However, things have changed at VW and VW appears now to be of the opinion that it would like to have its own autonomous driving system leading to it making a bid to acquire Aurora.
• Aurora decided that it wished to remain independent leading to it rebuffing VW’s offer which in turn led VW to seek a solution elsewhere.
• Aurora tests in California and so some basic data is available with regard to its performance.
• In 2018, RFM ranked Aurora 11^th out of the 30 companies that it has data for, with Aurora suffering 127 disengagements every time Waymo suffered one.
• Consequently, VW is not exactly going to be short of options in terms of where to go next and it will probably be able to acquire another solution that ranks better than Aurora.
• The real problem that is emerging is that all of the predictions of autonomous driving becoming a reality in 2020 or soon afterwards now look like a fantasy and even Elon Musk admits that he is not very good at estimating timing.
• These expectations have been pulled back to “some time in the next 10 years” which is broadly in line with RFM’s estimate of 2028 which remains unchanged since 2017.
• The net result is that start-ups are going to need more money as the outlook for revenue generation has been considerably pushed back.
• Given that the field is very crowded, I think that this is already a big problem, triggering the shake-out that we are beginning to see.
• This should put OEMs under no pressure to rush to an autonomous driving solution as the next few years are likely to be littered with fire sales of solutions that will be able to come to market with a little more development.
• It is Zoox, Nuro, Pony.ai (China), AImotive, & Renovo that I would be looking to acquire as these companies make up the upper end of the performance table.
• There are tricky times ahead for this segment of the auto industry.