In parts of Arizona, “fully” autonomous ride hailing services from Waymo One are now available to the general public. This has come after months of testing by Waymo, the autonomous driving technology company owned by Alphabet, Google’s parent company. Until recently, Waymo One’s fully autonomous service was only available to a select group of participants who signed a NDA to take part in a trial study in Phoenix. The newly available ride hailing cars are particularly notable because there are no supervised safety operators in the front seat of the vehicles. They are fully autonomous, marking a huge milestone for Waymo, and for the entire autonomous vehicle industry.
The release of Waymo One is just the first step in what is poised to be the most important wave of disruption since the assembly line was introduced to mass produce Ford Motor’s Model T in the early 1900s. The industry has introduced many innovative technologies recently, including powertrain electrification, advanced driver-assistance systems (ADAS), smart GPS, smart key ignitions, and rearview cameras, among many others. The decade ahead, however, will bring innovations that will do more than enhance the automobiles we know today. The application of self-driving technologies will stretch far beyond just Waymo, with companies driving autonomous vehicles forward globally.
Thanks to the powerful combination of artificial intelligence (AI), the Internet of Things (IoT), and 5G, this next wave of change is expected to revolutionize and reshape the industry as we know it. As with any emerging technology, the evolution of autonomous vehicles has created a dynamic field of players. While the following companies are the current leaders, we expect the dominant names to shift over time. Our ROBO Global Index Methodology is designed to capture these changes as they occur.
In summary, here are the current companies involved in the self-driving car space for investors:
- Waymo (GOOGL-THNQ member)
- Cruise (GMTesla (TSLA-THNQ member)
- Appen (APPN-THNQ member)
- Microsoft (MSFT-THNQ member)
- BMW (BMWYY)
- Baidu (BIDU-THNQ member)
- Ford (F)
- ROBO Global Artificial Intelligence Index (Ticker: THNQ)
Which companies are leading the way for self-driving development?
Waymo (GOOGL-THNQ member): The undisputed leader and the most established pure-play player in the space, Waymo has been working on driverless technology since 2009 and has conducted 25M+ miles to date according to our research. The company has already spent billions on research and is the only company generating revenue from autonomous ride hailing and cargo transportation services. Waymo’s strategy is to focus on building out its self-driving software, not to be a manufacturer of cars. Toward that goal, it has partnered with automakers, including Chrysler, Nissan, and Volvo, to develop autonomous cars and trucks for commercial use. Waymo’s cars use massive amounts of sensors, on-board AI computing power, and Google’s extensive mapping data to ‘see’ the world around them and choose an optimal route from point-to-point.
Cruise (GM): A start up by GM, Cruise has a line of electric shuttle buses called Origin that was built for the ridesharing market. Its new design, which has no steering wheel or pedals, was co-developed with Honda Motors in an effort to catch up with market rivals. Via a partnership with Lyft, GM now has the most aggressive test plans among legacy automakers. In 2019, Cruise was valued as high as $19 billion. In March 2020, GM announced plans to invest more than $20B through 2025 on its next-gen electric and automated cars. In October 2020, Cruise announced that the company will begin testing autonomous vehicles without safety drivers in San Francisco by the end of the year.
Tesla (TSLA-THNQ member): One of the most aggressive players in the market, Tesla’s current models feature a semi-autonomous and incredibly powerful computing platform. The company’s CEO, Elon Musk, has spoken about introducing a Level 5 car, but it remains to be seen what that will actually entail. While Tesla’s current models are wildly popular, their lack of LiDAR technology for ‘driver assistance’ may not be sufficient to qualify as ‘semi-autonomous’ for some. Because the cars are incapable of seeing immobile obstacles (due in part to the limitations of current sensor technology), a human driver is still needed to monitor the road at all times.
Appen (APPN-THNQ member): A pioneer in the space with over 25 years of AI training data experience, Appen will help accelerate self-driving capabilities for the industry. Its cutting edge tools and software platform use machine learning algorithms to assist LiDAR, video, speech, and NLP. Headquartered in Australia, Appen currently works with seven of the top 10 auto companies.
Microsoft (MSFT-THNQ member): The company provides various cloud solutions for Ford, Nissan, and BMW. It aims to play a bigger role in collaborating with automakers by providing cloud-based AV technologies using Azure and Windows O/S to assist in powering machine learning algorithms.
BMW (BMWYY): With plans to launch Level 5 AVs by the end of 2021, BMW has deep financial resources and has invested heavily in autonomous motorcycles. The company operates several R&D centers throughout the world and has been very aggressive in its pursuit of JVs with Chinese partners.
Baidu (BIDU-THNQ member): The first to complete a commercial launch in China, Baidu announced in October that its AI-powered Apollo cars will offer ride hailing services in Beijing. These Level 4 vehicles are capable of handling massive amounts of data and use 5 cameras and 12 ultrasonic radars to map the road. Baidu is currently rolling out mini shuttle buses, as well as driverless valet parking solutions. The company is also working on a smart traffic signal solution that can reduce average wait times by 20-30% during rush hours.
Ford (F): Ford has pledged $4B to AV development this year. In addition to its aggressive investment in ArgoAI, it has partnered with Walmart to develop driverless delivery trucks. The company’s recent acquisition of Quantum Signal adds unmanned remote systems for simulation purposes to the toolbox.
Promising Providers of Self-Driving Technology
Fully autonomous vehicles require extremely reliable, high performance, power-efficient, adaptive computing solutions. Leading chip providers include Xilinx (XLNXTHNQ member), Nvidia (NVDA-THNQ member), and Infineon (IFX-THNQ member). All of the leading automakers have mapped out their architecture with accelerators, controllers, and GPU/CPU processors for data processing with leading-edge solutions from these top chip makers. These index members play a very significant role in enabling autonomous/ADAS platforms, sensors, and electrification.
Private Provider Companies to Watch
- ArgoAI (Private): Currently valued at $7.5B, Ford invested billions on ArgoAI’s AV technology in 2017 in exchange for large ownership of the company. In recent months, Ford has sold its partial stake to VW for $3.5B, the only profitable division for the company in second quarter.
- TuSimple (Private): This company recently raised $300M in funding, putting its latest valuation at +$1B. Backed by key investors and partners like UPS, it has R&D centers in China and the US.
- Luminar (Private): Based in California, Luminar has developed a LiDAR that is small enough to fit on a car’s bumper. The company has already Source: Baidu Source: Nvidia raised over $500M to boost manufacturing capacity and is currently working on several pilots with large automakers. Results look promising, and the company has announced plans to go public in a SPAC deal.
- Navya and May Mobility (Private): These two newcomers are developing and testing Level 4 autonomous driving software systems for ridesharing shuttle services.
- Pony.ai (Private): After raising $726M, the company is working to build a full-stack autonomous driving solution.
Autonomous Rideshare Companies for Investors
Much like Netflix has disrupted the media industry and Airbnb has disrupted the travel industry, ridesharing has turned the auto industry upside down. According to McKinsey6 , if you live in an urban environment, ridesharing can be up to 50% cheaper than owning your own car. Longer term, there is a growing trend among younger generations, across cultures and regions, for more connected cars that run on electric power and improve mobility. They also express a growing lack of desire to own a car. Autonomous ridesharing—which is basically a mobile car hailing service that uses driverless technology—is expected to add to this disruption.
The market opportunity is very large. The ride hailing market is already a $60B market and poised to grow to a $218B market by 2025, at a CAGR of 20%7 . The addition of AVs to this equation could accelerate that growth dramatically, and these automakers and technology providers are already working to make autonomous ridesharing a reality:
Waymo One (GOOGL-THNQ member): It is hard to imagine a company that can catch up to Waymo at this point. With over 25 million miles driven on public roads and 600 vehicles dedicated to autonomous ride hailing, its vehicles have the most real-world experience of any ridesharing service today, and the service in Phoenix now has over 2,000 monthly active users.
Uber (UBER): With $1B in investments from Toyota, Denso, and Softbank, Uber is finally in a position to move beyond the development stages for its self-driving taxis.
Lyft (LYFT): in 2017, Lyft announced the launch of its Level 5 self-driving cars (despite experts labeling the functionality as Level 4). Together, Lyft and Aptiv have had 100,000 paid self-driving car rides. The two companies are now analyzing the data gathered during those trips to take AV technologies to the next level.
Zoox/Amazon (AMZN-THNQ member): Amazon acquired AV company Zoox in June 2020 for $1.3B, a move that surprised many industry insiders. Zoox has been testing its AI software, but its vision is to be a leader in providing autonomous ride hailing. This acquisition, combined with the company’s 100M+ Prime members, makes Amazon’s entrance into the space the biggest threat to Uber and Lyft to date. Amazon has also invested in Aurora and Rivian, an electric truck startup, ordering 100k electric self-driving delivery vans by 2030.
Over the next several years, we expect to see more strategic collaborations among automakers and AV technology providers; partnerships will be formed and a slew of M&A opportunities will arise. We also anticipate a rapid evolution of the auto industry, built largely on the active investments in AI software platforms by many of today’s legacy automakers and technology companies. Their commitment to delivering on the promise of self-driving cars—and their desire to win the race to market leadership—will make the AV market a reality. ROBO Global’s Artificial Intelligence Index (THNQ) is designed to fully capture this growth potential, and to offer investors direct exposure to what will be the auto industry revolution of the century.