Autonomous Autos – Tale of two camps

No co-incidence that SoftBank chose Cruise. 

• By investing in autonomous driving, SoftBank is adding another horse to its stable of investments aimed at revolutionising the transport industry.
• Softbank is investing $2.25bn in the autonomous driving arm of General Motors (GM) giving it a 19.6% stake in the company at a post money valuation of $11.5bn.
• SoftBank will invest $900m now and then a further $1.35bn when GM Cruise’s vehicles are ready for deployment.
• Hence, this represents an investment to help the company develop its product and then scale it when ready.
• GM is also putting in another $1.1bn that is hoped to give GM Cruise enough money to make it to profitability.
• This may prove a forlorn hope as RFM sees autonomous driving taking far longer to come to market than the industry expects.
• I think that the choice of GM Cruise for its bet in autonomous driving makes complete sense.
• This is because in RFM’s latest analysis of autonomous driving offerings (see here), GM Cruise came from nowhere to comfortably take the No. 2 slot behind Waymo.
• Waymo is still 5x better than Cruise when it come to disengagements, but GM Cruise drove all of its miles in downtown San Francisco which it argues is the most difficult environment within which to operate an autonomous vehicle.
• I would argue that it is certainly the most complex but also the slowest, giving the computer much more thinking time than it has on a suburban street or highway.
• Either way, this was an impressive performance and for the first time, there is a credible challenge to Waymo’s dominance.
• This is exactly why SoftBank chose GM Cruise as it is the best global offering in which it would be able to get an investment.
• This is where Uber should be looking for an autonomous solution rather than considering letting Waymo onto its platform (see here).
• With this investment two camps are emerging in autonomous autos and ride sharing: the Google / Lyft camp and the Softbank, Uber, Didi and Cruise camp.
• If the market was ready for autonomous autos today, then I could see these two camps slugging it out for global dominance but I don’t think it is going to work out this way.
• This is because RFM research has concluded that the market for autonomous driving will not be ready until at least 2028.
• Hence, the technology is likely to be ready long before the market is ready to receive it, giving the stragglers time to catch up.
• OEMs pondering which camp to go for, or even do their own, have plenty of time to make up their minds and should have plenty of choice when it comes to which technology to use.
• They should feel no pressure to make choices that they might later regret.

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