An Apple a Day Keeps the Car Away
March 3, 2024
This Week in The Autonomy Economy, The Road to Autonomy Index Apple pulled the plug on the dream of an Apple Car, California Public Utility Commission (CPUC) approved Waymo’s planned commercial robo-taxi expansion in Los Angeles and the San Francisco Bay Area and Mary Barra reiterated her support for Cruise, while mentioning personally owned autonomous vehicles are coming.
Daimler Truck reported FY 2023 pre-tax earnings of €5,489 billion, up 39% from €3,959 in 2022 and mentioned the company will continue to invest in autonomy with the goal of launching commercial operations in 2027 in the U.S.
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Apple, GM, Daimler Truck and Waymo parent Alphabet are The Road to Autonomy Index component companies
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What’s Moving the Markets
An Apple a Day Keeps the Car Away
On February 27th, Bloomberg reported after 10 years and $10 billion of investment, Apple decided to pull the plug and shut the car project commonly known as “Project Titan”down.
Why now? It’s not a matter of finances as Apple currently has $162.1 billion in cash on hand and bought back $77.55 billion in stock in fiscal 2023. It’s simply a matter of vision. Without Steve Jobs, Apple is missing the driving force internally who would persist until the impossible was possible.
At the outset, the Apple Car seemed impossible. But in reality it was not impossible, it simply lacked a vision from a leader who would dare to reinvent the car and fully integrate the closed Apple ecosystem. If the Apple car was to succeed, it would have to have been designed not as a car, but as an extension of the Apple ecosystem.
If the vision was seen through, visionOS would morph into carOS and spatial computing would have gone mainstream without the need for a headset. But that vision did not happen, instead we got the Vision Pro, a headset that looks straight out of Ready Player One.
After early adopters bought the headset, demand for Vision Pro has declined rapidly according to Ming-Chi Kuo, Analyst at TF International. The Vision Pro is a niche product with limited mainstream consumer appeal today.
The three critical factors in moving Vision Pro from a niche to a mass-market product are applications, price, and headwear comfort. Improvements/changes in these three critical factors will be important to watch.
– Ming-Chi Kuo, Analyst, TF International
An Apple car on other hand is not a niche product. It’s a mainstream product with mainstream appeal. A product that would further bolster Apple’s ever-growing ecosystem. With plateauing revenues, Apple needs to develop the next great product that will lead to significant revenue growth.
That product could have been the Apple Car, but sadly it won’t be. Apple gave up on the dream, to bolster their AI ambitions in an effort to catch up with OpenAI and Microsoft.
The Apple Car started as dream and it end as a sad reality. It will go down in history as a footnote alongside the Tucker 48. With the difference being, Preston Tucker willed the Tucker 48 into production despite all the headwinds, while Apple took the easy road and simply pulled the plug.
Our take: An apple a day kept the car away. It’s unfortunate, as Apple would have had their Tesla moment and forever changed the way we think about in-vehicle experiences. Tesla, the ball is your court now.
Apple, Microsoft and Tesla are The Road to Autonomy Index component companies
It’s All About the Data
In a February 28th Apple Cancels Car: 5 Thoughts report, Mogran Stanley equity analyst Adam Jonas shared insights into the amount of data that Tesla is gathering each and every day.
All about the data. In our view, an Apple car cannot have a steering wheel. But an AV cannot be a surprise “and one more thing” unveiling at an Apple WWDC. It is a highly specialized computer vision/robotics/edge AI problem that must be tested and iterated by vehicles collecting optical data on public roads over hundreds of billions of miles.
The Washington Post recently reported, citing public records, that Apple had 67 vehicles testing autonomous capabilities across 450 thousand miles from December 2022 through November 2023.
Tesla has over 5 million vehicles (fitted with FSD hardware and software) in service driving an estimated 50 billion miles per year. Tesla’s vehicle fleet drives around 100 thousand miles per minute.
Tesla’s fleet drives more miles in 5 minutes than Apple’s fleet reportedly drives in a year. By 2030, we estimate Tesla’s global vehicle fleet will approach 40 million units in service, driving over 400 billion miles per year. Over 1 billion miles per day or nearly 13 thousand miles per second.
From our conversations with AI experts, such a ‘monumental’ dataset may be an advantage for machine learning and neural net training.
– Adam Jonas, Equity Analyst, Morgan Stanley
With FSD 12 (Full Self-Driving), Tesla is switching from a rules-based approach to a neural network-based approach. The neural network-based approach to developing autonomous driving will enable Tesla to accelerate the development of FSD. This development will only be further accelerated by the 13,000 real-world driving miles of data per second that Morgan Stanley is projecting by 2030.
Our take: It’s only a matter of time until Tesla solves autonomous driving.
Apple and Tesla are The Road to Autonomy Index component companies
Cruising to a Personally Owned Autonomous Vehicle
In an exclusive interview with Barrons on March 1st, GM CEO Mary Barra reiterated her support for Cruise, while mentioning personally owned autonomous vehicles are coming.
If GM were to develop a personally owned autonomous vehicle and introduce it to the market, the company would be competing with Tesla on another front. Tesla has FSD and GM has Cruise. Can the Cruise technology be ported to personally owned autonomous vehicles? Or is their approach too sensor dependent to commercialize outside of robo-taxis?
Only time will tell, but it will take continued investment and technical talent to achieve GM’s goals for autonomy. During the interview when asked; Yet, for 2024, GM slashed spending on Cruise by $1 billion. What is the game plan? Are you phasing it out? by Eric J. Savitz, Associate Editor for Technology, Ms. Barra responded:
No. We’re continuing to invest in the tech team. Not long before the incident in October [a Cruise car struck a pedestrian in San Francisco], Cruise was talking about being in 20 cities. There was a lot of money being spent, infrastructure was being built, and people were hired to do the operational piece. The rollout will now be slower. We didn’t touch the core technical talent. We remain committed to Level 4. We’re busy working to relaunch Cruise.
– Mary Barra, CEO, GM
While the technical talent remains in tact at Cruise, the question remains for how long? Cruise employees were informed this week that their shares are down more than 50% from $24.27 to $11.80 over the last quarter.
With a declining share price, low company morale and the NASADQ up 10.22% YTD, engineering talent will look for greener pastures with larger upside payouts. If Cruise looses their technical talent, it’s over. No matter how much Ms. Barra wants to introduce a personally owned autonomous vehicle.
Our take: GM still has decisions to make with Cruise and their plans for personally owned autonomous vehicles. As GM stumbles on EVs and autonomy, the company continues to fall further and further behind Tesla.
GM and Tesla are The Road to Autonomy Index component companies
Daimler Truck Continues to Invest in Autonomy
On March 1st, Daimler Truck reported FY 2023 pre-tax earnings of €5,489 billion, up 39% €3,959 in 2022. All segments of Daimler Truck business contributed with profit growth. Overall revenue increased by 10% to €55.9 billion up from €50.9 billion in 2022.
Robust earnings have enabled the company to increase the dividend from €1.30 per share to €1.90 per share and announce a €2 billion buyback program.
Along with returning cash to shareholders, Daimler Truck is investing in autonomy. On the Q4 2023 earnings call, Frank Biller, Senior Investment Analyst at Landesbank Baden-Württemberg and Martin Daum CEO of Daimler Truck AG engaged in a dialog about Daimler Truck’s plans for autonomy. A transcript of that exchange is below:
Question: Frank Biller, Senior Investment Analyst at Landesbank Baden-Württemberg
Thanks for taking my question. There’s also one left here. The one is on autonomous driving. I haven’t heard anything about autonomous driving within this in this call. Maybe you can give us an update what’s going on in Daimler Truck and hear the time progresses?
Answer: Martin Daum, CEO of Daimler Truck AG
The reason why you haven’t heard anything in the call is because we were focusing on 2023 and 2024, and certainly autonomous is part of our investment. It’s part of our investment in the future.
Therefore, in the figures you have seen, autonomous is included. We make very good progress on that. It’s one of the huge strategic topics and opportunities that can really reshape the industry. I have a feeling we are very well-positioned there.
And when we have more strategic-oriented meetings, we definitely will talk a lot of autonomous and you’ll see more in 2024. We had a couple of really good press coverage last year, and we will have more to tell about our progress, and we’re progressing very well with our subsidiary talk, with our redundant chassis, and, most importantly for me, in the collaboration with our large customers in the United States.
And there will be a lot of exciting news in 2024 as well on that topic.
Question: Frank Biller, Senior Investment Analyst at Landesbank Baden-Württemberg
So, nothing changed here from speeding time? It’s not slowing like some car companies do right now?
Answer: Martin Daum, CEO of Daimler Truck AG
No, it’s not slowing down. It’s diligent work. It’s a grinding work of getting things done. The hardware going, the sensoring going, the software stack is going, and look for all the crazy edge cases, we call it, that can happen out there on the roads.
Driving truck on the road, simulating different scenarios. Exciting stuff, could talk hours about it, but you’ll hear more about that during the year.
Daimler Truck’s goal is to enter the U.S. market in 2027 with a commercial autonomous truck product. Three years from now the landscape in autonomous trucking is going to look a lot different then today. With their investment commitment and market-leading Freightliner Cascadia, we expect Daimler Truck to play a large role in the future of autonomy.
Our take: Daimler Truck could end up being one of the largest and most significant companies in the autonomous trucking ecosystem by the end of the decade.
Daimler Truck is a The Road to Autonomy Index component company
Social Buzz
Autonomy with a Side of Fries
On February 29th, Kodiak announced the company is delivering refrigerated freight for Martin Brower. The move into the QSR (quick service restaurant) sector is a strategic move for Kodiak, that will be further be bolstered by a potential economic downturn.
Your next order of fries may have traveled on a Kodiak truck.
– Don Burnette, Founder & CEO, Kodiak
Martin Brower delivers for McDonalds, Chick-fil-A, Chipotle, Five Guys and Pizza Hut to name a few. If the public knew that their fries and hamburgers were delivered by an autonomous truck, would it increase the public trust of autonomous trucks?
Our take: The Kodiak business appears to be firing on all cylinders.
CPUC Approves Waymo’s Expansion
On March 1st, the California Public Utility Commission (CPUC) approved Waymo’s expanded commercial robotaxi operations in Los Angeles (250 square miles) and the San Francisco Bay Area (160 square miles).
As part of the approval, Waymo was granted permission to operate on freeways up to 65 mph with no cap on the size of the Waymo fleet.
Soon you will be able to ride on the Santa Monica freeway to the beach, without having to fight traffic. That’s Waymo’s job now. Los Angeles will become Waymo’s largest service area behind Phoenix (225 square miles), followed by the San Francisco Bay Area.
In total Waymo will now be operating in a 635 square mile service area. When Austin, Texas comes online, Waymo’s service area could expand to over 800 square miles. Add Miami into the mix and Waymo is now operating in a 1,000+ square mile service area.
While the service area expansion is a major milestone for Waymo and the entire autonomous vehicle industry, what are the economics of the service?
As Waymo expands and onboards new riders, we would encourage Ruth Porat, President & Chief Investment Officer to pull back the curtain and shed some economic light on the business of Waymo.
We would like to know the following:
- What is Waymo’s business model?
- How large of a commercial operating area and how large of a fleet does Waymo need to become a profitable business?
- How is Waymo picking the commercial operating areas? Who has final say?
- How is Waymo pricing the service and how will that change from market to market?
- Will Alphabet again seek outside funding for Waymo? If so, how much?
- How long is Alphabet planning on funding Waymo?
- When is Alphabet projecting Waymo gets cash flow break-even?
- What is Waymo planning to do with the soon to be delivered Daimler redundant autonomous-ready Freightliner Cascadias? (Of note: John Krafick, Fmr. CEO of Waymo sits on Daimler Truck’s Supervisory Board)
- Is Waymo Via coming back at some point?
- How is Waymo currently thinking about middle-mile delivery?
Waymo is no longer a moonshot, it’s now a reality and soon to be a business.
Our take: The dawn of the autonomy economy is upon us and Waymo is the clear leader in robo-taxi deployments. Now they just have to make it a profitable business.
Waymo parent Alphabet is a The Road to Autonomy Index component company
Nissan is Preparing to Launch an Autonomous Vehicle Service in Japan by 2027
Nissan is planning to launch an autonomous vehicle service in Yokohama, Japan (35km south of Tokyo) with 20 vehicles in 2027. While the initial roll-out is a small pilot, it’s an important step for the country of Japan.
If Nissan can prove autonomous vehicles benefit society by ensuring elderly citizens can retain their independence, the Japanese economy will benefit.
Nissan’s proposed roll-out is similar to the model Voyage deployed in The Villages, a 55 and older active adult retirement community located outside of Orlando, Florida prior to their acquisition by Cruise in March 2021.
In July 2019, we had the privilege of visiting Oliver Cameron, Co-Founder & CEO of Voyage at The Villages.
During our visit we noticed several things, but there are two things that still standout to us to this day.
- Rides to and from the doctor’s office.
- Transporting grandkids to and from the airport.
These were requests for route expansions made by early riders known then as Pioneers. These routes would enhance the overall quality of life and fill the everyday needs of individuals living in The Villages.
If Nissan can deploy The Voyage model to a large city and the surrounding suburbs, Nissan could be the company to usher in autonomy for Japan’s aging population.
Next, Nissan and perhaps Toyota will have to figure out the business model and scale operations.
Our take: Autonomous vehicles are needed in Japan due to the aging population and low birth rates. Autonomous vehicles will ensure elderly Japanese who commonly prepare to age in place continue to have their mobility freedom.
The Road to Autonomy Index® / Weekly Performance
The Road to Autonomy Index® is a high-definition lens into the emerging world of autonomous vehicles. It is the world’s first and only pure-play index designed to measure the performance of the autonomous vehicle/truck market.
For the week of February 26, 2024, The Road to Autonomy Index returned 2.50%, the S&P 500 returned 0.95% and the NASDAQ 100 returned 2.04%.The Road to Autonomy Index outperformed the S&P 500 by 1.55% and outperformed the NASDAQ 100 by 0.46%.
The top performing stocks in The Road to Autonomy Index this week were:
- Daimler Truck Holding AG returned 21.68%
- Mobileye returned 13.94%
- Micron Technology returned 10.64%
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Latest The Road to Autonomy Podcasts
The Road to Autonomy podcast hosted by Grayson Brulte is a podcast featuring unconventional conversations about the future of mobility and the emerging autonomy economy. New episodes every Tuesday.
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Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, February 27, 2024
The Year of Autonomous Drone Delivery
Shannon Nash, Chief Financial Officer, Wing, an Alphabet company joined The Road to Autonomy podcast to discuss Wing’s operations in the Dallas Fort Worth (DFW) region and why 2024 is the year of autonomous drone delivery.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, February 20, 2024
It All Comes Down to Unit Economics
Matt McLelland, VP of Sustainability and Innovation, Covenant joined The Road to Autonomy podcast to discuss why it all comes down to unit economics when fleets are evaluating new trucking technologies such as battery electric trucks and autonomous trucks.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Wednesday, February 14, 2024
Subscribe to This Week in The Autonomy Economy™
A weekly newsletter featuring insight and commentary on the autonomy economy™ and how the financial markets are viewing its emergence.
All price references and market forecasts are as of the date that this newsletter has been sent. The Road to Autonomy is not providing any financial, economic, legal, accounting, or tax advice or recommendations in this newsletter. The information contained in this newsletter does not constitute investment advice and should not be relied upon to evaluate any potential transaction.
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