Autonomous Autos – Capitulation

Autonomous driving enters the capitulation stage

• Autonomous driving continues to have a torrid time as its devotees adjust to the reality that has been obvious for quite some time.
• Argo AI is the latest victim which combined with Tesla being the subject of 2 NHTSA defect investigations and plummeting valuations puts autonomous driving firmly in the capitulation phase of the investment bubble cycle.
• Argo AI has been in trouble for some months as it announced layoffs 4 months ago (see here) but now it appears that its backers have declined to throw good money after bad, leaving it insolvent.
• With no one else showing up, the only option remaining is to close its doors adding another headstone to the increasingly well-populated graveyard.
• The problem is simple.
• Targets for autonomous driving were set by executives who knew nothing about AI and assumed that the problems would soon be solved.
• Consequently, they thought they would have revenues by now and set their budgets accordingly.
• For example, when Ford and VW invested, Argo AI set expectations for vehicles to be on the road by 2021.
• Now that revenues may not show up for another 6 years or more, they face raising money in one of the most challenging investment climates we have seen in 14 years.
• This is why autonomous driving companies are dropping like flies and I suspect that there are more to come.
• The predominant method by which an autonomous driving system perceives its surroundings is deep learning which in reality, is nothing more than a sophisticated statistical pattern recognition system.
• This means that deep learning has no causal understanding of what it is doing and as such, is unable to think outside of the box.
• The net result is that whenever a situation arises that the machine has not been explicitly taught, it will fail to correctly interpret the situation which will cause the vehicle to make a mistake.
• The problem is that this occurs all the time on the open road which is why the speed of progress has been far slower than many had hoped.
• Furthermore, this slowness has allowed the laggards to catch up supporting my long-held view that when shopping for an autonomous driving solution, OEMs will have plenty of equally good offerings to choose from.
• This seems to have finally dawned on Ford and VW where Ford took a $2.7bn write down (Q3 2022) on its investment in Argo AI and switched its priority to ADAS (Level 2+ and 3) rather than Level 4 and 5.
• I suspect that VW will follow suit when it reports later this week.
• Consequently, I see no reason to change RFM’s original target (set in 2017 see here) for autonomous driving which expects commercialisation of the technology to occur in 2028.
• With the way things are going, this is increasingly looking like it may be optimistic but 6 years is a long time in the technology industry and so I think that 2028 is still achievable.
• I remain optimistic about this technology in the long term but the road forward is only going to get harder.