If You’re Ever Down in Dallas, Look Up Cruise
June 9, 2024
This Week in The Autonomy Economy is presented by Koop Insurance, a specialist insurance provider focused on robotics and autonomous vehicles.
This Week in The Autonomy Economy, The Road to Autonomy Index returned 0.85%, Cruise expanded manual driving to the Big D, Zoox expanded testing to the Magic City and Bat City, while Waymo expanded their service area in the Valley of the Sun to 315 square miles.
It was a week of expansions with the backdrop of a weakening economy and accelerated (still unreported) layoffs in the automotive supplier sector. Expanding in a weakening economy proves the resilience of having a parent company to fund the development and commercialization of autonomy.
While this model is not necessary to succeed in autonomy, a model that is grounded in economic reality is required. While some companies have thrived under the parent company model, others have struggled and some have folded. There are two companies currently operating under the parent model that are floundering today.
The reasons for the floundering are distinct, yet similar. The July 20, 2024 AUTONOMY LEADERBOARD update will reflect the current state of the autonomy market with detailed commentary.
California, the land of high taxes and over-regulation is once again up to its old tricks — making doing business extremely difficult and expensive. SB 915, a bill that would give local governments control over autonomous vehicles and the ability to enact their own regulatory requirements is making its way through the state legislature. Without a veto by Governor Newsom, California will unfortunately live up to its reputation by making doing business in the state impossible.
Why overregulate an emerging economy that is already having a positive economic benefit on California? Simple, special interests. What’s happening in California is the all too common sad state of power dynamics that shape policy.
While California struggles with autonomy, other states are benefiting. Arizona, Texas and Florida have opened their states to autonomy, as they clearly see the economic benefits this technology will have on their state’s economy.
Autonomy is going to become an economy that we call the autonomy economy. Each and every week we will continue to bring you our thoughts and insights on the emerging autonomy economy.
Thank you for being a reader. If you ever have any feedback, thoughts or just want to discuss autonomy in general, simply respond to this email.
Cruise parent GM, Waymo parent Alphabet and Zoox parent Amazon are The Road to Autonomy Index component companies
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Autonomy Avenue Whispers
Another Pivot in Detroit? There are whispers on Autonomy Avenue that a strategic decision made in 2022 is causing heartburn amongst the C-Suite decision makers that made the ultimate decision. Whispers are swirling that another pivot is on the table. Will the third time be the charm?
What’s Moving the Markets
If You’re Ever Down in Dallas, Look Up Cruise
If you are ever down in Dallas, wondering what to do, at some point in the future you will be able to hail a ride in a Cruise autonomous vehicle. On June 3rd, Cruise announced that they have resumed manual driving in Dallas, TX.
Manual driving is the first step before Cruise can begin operating a commercial autonomous vehicle service in the Big D. Once Cruise validates the system, tests it thoroughly and it gets a safety sign-off, they will be able to offer paid rides in autonomous vehicles to members of the public in Dallas.
Dallas is the second city behind Phoenix where Cruise has begun manual driving and mapping operations. Despite all the hype in the autonomous vehicle market that Waymo has won, Cruise is still there and they are on a mission to prove this is not a comeback.
In a nascent market that has yet to be fully developed, it’s too early to declare a winner, but’s not too early to declare a leader. Waymo is the clear leader in autonomous vehicles today. We currently have the company ranked #1 on the AUTONOMY LEADERBOARD for the autonomous vehicles category, but that could change in the future as markets always change.
In 1980, the world’s largest company by market cap was IBM at $34.6 billion ($128 billion with inflation factored in). Today, that company is Microsoft with a market cap of $3.06 trillion, while IBM’s market cap is $151.1 billion — a delta of $2.9 trillion compared to Microsoft.
You can never rest on your laurels and declare yourself the victor, as markets always change. When companies such as Microsoft mount a comeback and change strategies, markets react.
On February 4, 2014, Satya Nadella became CEO of Microsoft. On that day, Microsoft had a market cap of $381.72 billion. In the fourteen years prior to Mr. Nadella’s assent to CEO, Microsoft was floundering and investors were losing confidence in the company as their stock declined 26% during that period.
The opposite has happened over the last ten years since Mr. Nadella became CEO. Under his leadership, Microsoft has added $2.6 trillion in market cap, because Mr. Nadella implemented the right strategies and executed on those strategies.
It’s now Cruise’s turn to implement and execute their right strategies. If they do, they could very well have their own Nadella moment. Despite what you might hear in the industry or read in the news, it’s too early to count out Cruise. They are simply just getting started once again, similar to the way Microsoft got going once again ten years ago.
Our take: Don’t call it a comeback, I been here for years.
Cruise parent GM and Microsoft (Cruise investor) are The Road to Autonomy Index component companies
SB 915, Roadway to High Fees
California, the land of high taxes and over-regulation is once again up to its old tricks — making doing business extremely difficult and expensive. There is a reason why businesses are leaving California in droves, and it’s not the beaches, it’s taxes and regulation.
This time legislators in the state are taking aim at the emerging autonomous vehicle industry. An industry that is projected to create 190 new high-paying jobs for every 1,000 autonomous vehicles deployed according to Chamber of Progress.
For every 1,000 autonomous vehicles that are deployed in California, 190 new jobs will be created. These jobs will be high-paying, as 82% of workers who work in the autonomous vehicle industry make more than the U.S. median wage of $44,520.
More importantly, individuals do not need a college degree to work in the autonomous vehicle industry. Providing a path to pursue a career in a growing industry without being saddled with ballooning college debt.
College debt currently totals $1.75 trillion (both federal and private). Why should a young individual with a bright future ahead of them add to this staggering amount of debt when there is an alternative path?
For California legislators it’s as simple as why take the alternative path when you can take the regulation path? The regulation path is the default path that legislators in California unfortunately follow. Want to know why? It’s simple, power and money. When legislators regulate they create the ability to tack on fees. Where does the revenue from these fees go — special interests projects.
For young individuals thinking about college and taking on debt, the autonomous vehicle industry path offers a debt-free way to start a great career. Yet, legislators in California once again think they know better and are potentially forcing young individuals into debt.
If SB 915 is passed and signed into law, it will increase the college debt dilemma. Another career path that does not require a college degree will be closed in California.
It’s an unfortunate reality, and one that California legislators are actively pursuing with SB 915. SB 915 would give regulatory authority over autonomous vehicles to local municipalities, creating a patch work of regulations and fees. In reality this would act as a blanket ban on autonomous vehicles in California.
Under SB 915, you might not be able to go from Downtown LA to Santa Monica, because you will pass through multiple municipalities with different regulations. Even if you can take that ride, beware of the fees and be prepared to pay more for that ride.
Think inflation is bad now? Just wait until local municipalities are given the right to tack on fees. It will be an economic nightmare and one that will see more businesses leave the state and force younger individuals to take on college debt.
If you are interested in learning more about SB 915, we would recommend the following podcast:
- The Will To Over-Regulate: Inside California Legislators Fight for Local Control over Autonomous Vehicles, A Conversation with Adam Kovacevich, Founder & CEO, Chamber of Progress (April 9, 2024)
Our take: Somethings never change, unfortunately.
China Hits the Accelerator, Green Lights Testing
On June 4th, China permitted 9 automakers including BYD, Nio and GAC to conduct SAE Level 3 testing on public roads as part of a plan to accelerate the adoption of autonomous vehicles.
China is going all-in on autonomous vehicles and will soon become one of the leading markets for the development and commercialization of autonomous vehicles. The autonomous vehicles developed in China will be exported to the world at some point.
Our take: As China accelerates towards an autonomous future, America is at risk of falling behind on the commercialization of autonomy. To avoid this fate, Congress has to come together in a bipartisan manner, put politics aside and do what is right for the American public. Autonomy is going to become an economy. Do we want that economy to be built here or there?
BYD investor Berkshire Hathaway is a The Road to Autonomy Index component company
Zoox Expands to the Bat City and the Magic City
On June 5th, Zoox announced that they are expanding testing to the Bat City (Austin, TX) and the Magic City (Miami, FL). While these deployments will not be commercial, they will provide valuable insights and pave the way for Zoox to deploy commercial operations in these cities at a later date.
When that date will be is yet to be determined, as there is no timeline to base projections on as Zoox’s commercial service in any city. However, based on industry norms, we would expect Zoox to bring on a new city every year after they initially launch service in Las Vegas. After the first couple of years in operation, we could see Zoox bringing on 1 to 2 new cities a year.
We are projecting a late 24 / early 25 commercial launch for Zoox in Las Vegas. If our timeline holds, we would expect to see Miami and/or Austin commercial operations come online in 2027. With Amazon founder Jeff Bezos now residing in Miami, perhaps Miami could get moved up in the deployment timeline.
Miami is one of the best markets in the United States to deploy autonomous vehicles because of the economics and regulatory environment. State Senator Brandes created the regulatory framework for autonomy to thrive in the Sunshine State. Now it’s Zoox turn to tap into the magic of the Magic City.
If you are interested in learning more about the regulatory environment for autonomous vehicles in Florida, we would recommend the following podcast:
- The Big Idea: A Conversation with Florida State Senator Jeff Brandes, A Conversation with Florida State Senator Jeff Brandes (March 9, 2021)
Our take: Miami is on the comeback trial. After Argo AI shutdown, Miami was without an autonomous vehicle deployment until May Mobility stepped in to fill the void. Now Zoox joins the party. Who is next?
May Mobility investor Toyota and Zoox parent Amazon are The Road to Autonomy Index component companies
Social Buzz
Ford Eyes SAE Level 3
Ford has their eyes set on rolling out hands off, eyes off SAE Level 3 system by 2026.
Level 3 autonomy will allow you to go hands and eyes off the road on the highway in a couple years so then your car becomes like an office. You could do a conference call and all sorts of stuff.
– Jim Farley, CEO of Ford
Suggesting that an SAE Level 3 system will become “like an office” is setting the wrong exception for drivers and the market. A SAE Level 3 system will never become an office as it requires the driver to still stay engaged.
Alex Roy rightly summed it up in litmus test he calls Roy’s Razor. Can I sleep in it? If yes, it’s self-driving. If no, it’s not. Just like power: On. Or off.
Ford’s use case does not pass Mr. Roy’s litmus test. A SAE Level 3 system that is capable driving up to 80 mph with the driver using the vehicle as an office is not a good idea.
Our take: Downgrading from Level 4 to Level 3 in the short-term might have looked like the right idea, but could very well turn out to be the wrong idea in the long run.
FSD 12.4.1
Tesla continues to update and enhance FSD. FSD 12.4.1 has been released to employees and a limited number of external customers. What Tesla has done with FSD is nothing short of miraculous. As FSD advances, we firmly believe that Tesla will crack full self-driving. It’s only a matter of time.
While it’s only a matter of time, we are still unsure of what the sensor suite will ultimately be. Hopefully we get some insight with the introduction of CyberCab on August 8th.
Our take: Tesla could end up one of the biggest winners in autonomy when it’s all said and done.
Tesla is a The Road to Autonomy Index component company
Expanding in The Valley of the Sun
On June 5th, Waymo announced that they have expanded their Greater Metro Phoenix service area by 90 miles. Waymo is now operating in a 315 square mile area, the world’s largest autonomous vehicle geographic deployment.
With the expansion, visitors to the region can now access great golf courses in North Scottsdale including TPC Scottsdale. When the winter golf season rolls around, planning a golf trip to Scottsdale will now come with a bogey, the 19th hole and a ride in a Waymo.
Our take: The future of autonomy is experiences and we are looking forward to seeing how Waymo integrates destination golf trips into their service offering this winter.
Waymo parent Alphabet is a The Road to Autonomy Index component company
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 June 3rd, The Road to Autonomy Index returned 0.85%, the S&P 500 returned 1.32% and the NASDAQ 100 returned 2.50%. The Road to Autonomy Index underperformed the S&P 500 by 0.47% and underperformed the NASDAQ 100 by 1.65%.
Year to Date (YTD), The Road to Autonomy Index has returned 11.88%
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The Road to Autonomy Podcast
The Road to Autonomy podcast features unconventional conversations about the future of mobility and the `Autonomy Economy features an insider’s perspective on the economics of autonomy. New episodes weekly.
Risky Business: Navigating Risk Aversion in an Autonomous World
Matt McLelland, VP of Sustainability and Innovation, Covenant joined The Road to Autonomy podcast to discuss why certain trucking companies aversion to risk could slow down innovation and have negative economic consequences on their businesses if they delay the rollout of autonomous trucks.
Listen on The Road to Autonomy | Apple Podcasts | Spotify | YouTube Music
Tuesday, June 4, 2024
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