Autonomous Timeline: Following the Money

The billions invested in automated-driving development may be starting to take a toll.

July 1, 2021

Bill Visnic

Cruise Automation’s Origin automated-driving shuttle. (Cruise)

Acquisitions, mergers and outright departures from the sector serve as almost weekly reminders not just that significant consolidation of autonomous-vehicle (AV) development is underway. Right in front of our eyes, the scenario many forecast for autonomy is unfolding like a classic film in which we know so many of the lines: The money is starting to add up and establish who continues and for how much longer.

Despite years of wildly inexpensive costs to borrow, the related shoot-from-the-hip attitude of venture capital and the evolution of seemingly ever-looser creative forms of finance (see: SPAC), the game is beginning to look like one to be survived only by the uber-wealthy – or those with deep fiscal reserves and legacy businesses to fund the long play of automation. The signal that there’s a new and higher-stakes phase afoot came (at least to my mind) when in early June both Alphabet’s Waymo and General Motors subsidiary Cruise Automation confirmed they were trolling for significant new funding.

Waymo’s announcement of a $2.5-billion funding round raised eyebrows, even if it promptly was fully subscribed by multiple heavy-hitters in the financial and automotive sectors. An executive at one auto-industry component maker brought it up during an interview on an unrelated topic, “We are still talking billions with a ‘B,’ correct?” After all, Waymo’s June money-raise came after a $3.25-billion funding round that was completed not even a year earlier.

Dating to 2015, Cruise has completed funding rounds totaling about $10 billion, according to Crunchbase (the most noteworthy investor is GM’s electric-vehicle partner Honda, but Microsoft tossed in, too). In June, Cruise took on $5-billion credit line from GM Financial to buy Origin vehicles slated for commercial (i.e. revenue-generating) service beginning in 2023 in Dubai.

Even allowing for the comparatively restrained commercialization approaches of Cruise and Waymo, a lot of years and a lot of money have been required to get to the respective pending commercial deployments for which they’ve applied for permits in San Francisco. Meanwhile other well-heeled entities, including Argo AI, Aurora and certain multi-national Tier 1 suppliers also are striving to be full AV “system” suppliers. Just as Waymo and Cruise were announcing their latest funding moves, Bryan Salesky, CEO of Argo — which itself has had billions of dollars in investment from chief backers Ford and Volkswagen — confirmed the company probably will pursue an IPO “within the next year,” Reuters reported.

Maybe I’m failing to see the potential steepening of the adoption curve once software, stacks and hardware are mature and deployments become commonplace. Maybe that curve’s going to look something like the one being projected for personal and commercial electric vehicles (EVs). The investments for EVs have been similarly massive — and will continue to be — but EVs are in the hands of private and commercial customers right now and more are quickly coming to at least narrow the chasm between investment and revenue. As the billions roll over like the reels on a slot machine, can everyone afford to wait for high-level automation to start paying off?