Licensing on Waymo’s Mind
June 2, 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 0.10%, Waymo has licensing on their mind, trucking has officially entered into a recession and Alain Kornhauser, Faculty Chair, Princeton Autonomous Vehicle Engineering hosted his annual SmartDrivingCar Summit in Princeton.
The SmartDrivingCar Summit is always a highlight on the annual autonomous vehicle conference circuit. Professor Kornhauser gathers an eclectic group of individuals for thought-provoking dialogue about the future of autonomy.
One of the highlights from this year’s summit was a panel featuring Dr. Mark Rosekind (Fmr. NHTSA Administrator and NTSB Board Member), Bryant Walker Smith (University of South Carolina), Bernard Soriano (CA DMV), Diana Furchtgott-Roth (The George Washington University), Ret. State Senator Jeff Brandes of Florida (Florida Policy Project), Ariel Wolf (Venable) and Councilmember Mark Stewart (Chandler, AZ).
The panel touched on all aspects of policy and what can be learned from the different approaches each state takes to regulating autonomous vehicles. Thank you Alain Kornhauser for the invitation and Jerry He for making the summit a great success. It was a wonderful event and we are very much looking forward for next year’s edition.
It’s now official, Waymo is on the record stating that licensing the Waymo driver is indeed a business model option that they might pursue. This is a big step for Waymo, and one that could potentially open the flood gates to a licensing arms race. Who makes the first move? Tesla, Waymo or Wayve? The company that makes the first move will set the precedence in the market.
In the Federal Reserve Bank of Dallas’ May 2024 Texas Service Sector Outlook Survey they officially stated trucking is in a recession. How deep will the recession get and how long will it last is something that we will be watching closely as it will have a direct impact on autonomous trucking.
As the economic climate changes, we will be watching to see what the overall impact on autonomy will be and who will end up benefiting from a souring economy.
Tesla and Waymo parent Alphabet are The Road to Autonomy Index component companies
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Autonomy Avenue Whispers
Successfully Avoiding Geopolitics There are whispers abound on Autonomy Avenue that a certain autonomous driving start-up has successfully migrated away from Hesai LiDAR also now known as American Lidar. The most intriguing aspect of this whisper is that this particular company is not using Ouster LiDARs.
What’s Moving the Markets
Licensing on Waymo’s Mind
Just an old thing called profitable revenue keeps licensing on my mind the whole day through.
According to Bruneteau, this—and the fact that Waymo doesn’t present competition in the automaking field—may provide an opportunity for Alphabet’s operation to license its technology. “There could be an invasion from the robo-taxi segment to the high-end and midrange segments of those [automakers] who haven’t been able to sufficiently invest,” he told me. “And today, that’s most of them.”
And a Waymo spokesperson indicated that this is indeed an option, noting that the Waymo Driver could be integrated with everything from ride-hailing vehicles and trucks to personal cars: “By building a driver, not a vehicle, we’re building a system of multiple applications and routes to commercial scale, which means we have multiple routes to huge markets without being locked into a single use case, and that our share of the [autonomous vehicle] market can grow without the costs of vehicle manufacturing.”
– Excerpt from a May 30, 2024 Fortune article titled Why China’s robo-taxi hopefuls face a rough ride in the U.S.
It’s now been confirmed — licensing the Waymo driver is indeed an option. If Waymo does move forward and license the Waymo driver, all eyes will be on the economics of the model. Waymo’s stack is more hardware intensive then both Tesla and Wayve’s stack, making it harder to scale.
Could a hardware-light version of the Waymo driver be in the works for personally owned autonomous vehicles that would operate in limited ODDs? It’s possible and something that we would not rule out, as investors continue to put pressure on Alphabet to turn Waymo into a profitable business or cut bait.
Licensing the Waymo driver would create a low-cost, scalable revenue stream for Waymo that investors would cheer. At the end of the day, autonomous driving is going to come down to a handful of operating systems and Waymo wants to be one of those operating systems.
Our take: Once Cruise, Tesla, Waymo or Wayve announces a major licensing deal, the flood gates will open and a licensing arms race will commence.
Waymo parent Alphabet is a The Road to Autonomy Index component company
Trucking is in a Recession
Despite the growth in the stock market, the economy is beginning to show signs of increased stress. In the May 2024 Federal Reserve Bank of Dallas Texas Service Sector Outlook Survey, retailers reported they are continuing to see a worsening of broader business conditions.
The general business activity index remained in negative territory and fell 11 points to -28.8, the lowest index level since December 2022. The company outlook index also fell from -6.4 to -15.7. The outlook uncertainty index increased six points to 15.1. There is clearly uncertainty in the economy and we are now officially in a trucking recession.
Trucking is definitely in recession. Truck freight in both volume and price per mile is way down. Our business won’t recover until the industry recovers.
– Federal Reserve Bank of Dallas May 2024 Texas Service Sector Outlook Survey
How bad the trucking recession gets and how long it last remains to be seen. When a truck delivers goods, they go to warehouses and distribution centers, which are still experiencing inflation.
We are seeing a little slowdown [in warehousing and storage], and inflation doesn’t seem to moderate as much as we expected, so we are still seeing increases in input costs and services.
– Federal Reserve Bank of Dallas May 2024 Texas Service Sector Outlook Survey
The cost of delivering goods is going to continue to increase because of inflation. Factor in rising insurance rates and nuclear verdicts and you have a recipe for a disaster. An economic disaster that could accelerate the adoption and commercialization of autonomous trucks.
Our take: At the end of the day it always comes down to economics. Autonomous trucks offer a compelling solution that is not subject to rising labor costs and market imbalances.
Rebooting Cruise
Cruise is attempting to do what no other company in the history of autonomous vehicles has done — reboot after a major incident. Uber’s autonomous vehicle dreams came to a screeching halt on the evening of March 18, 2018 in Tempe, Arizona. Two years after that unfortunate incident, Uber sold their ATG division to Aurora.
The sale marked the end of Uber’s autonomous vehicle deployment ambitions. GM could have followed a similar path and either shutdown Cruise or sold it after their October 2, 2023 incident. They chose neither and instead decided to double down and reboot the company. Since that time, GM cleaned house at Cruise, brought back Rob Grant as Chief Government Affairs Officer and hired Steve Kenner as Chief Safety Officer.
The hirings of both Mr. Grant and Mr. Kenner signaled to the market, GM is doubling down on Cruise. It’s a wise move and one that will pay off for GM shareholders down the line, if GM and Cruise can ignore the noise from the peanut gallery. Everyone has an opinion, but not everyone has a strategy.
We will be looking to see what that strategy ultimately GM puts in place at Cruise. That strategy could be a licensing model, a robotaxi model, a personally-owned autonomous vehicle model, or it could be a combination of all of the above.
While the focus today is on comparing Cruise to Waymo, it’s the wrong comparison as GM has not made the Cruise 2.0 strategy public. Compare GM to Ford and you have a clear winner — GM. Ford announced on October 26, 2022 that it was winding down Argo AI, leaving the company with no autonomous driving efforts until they launched Latitude AI in 2023.
It was a decision that could come back to haunt Ford as GM reboots Cruise and once again establishes the company as one of the leaders in the development and commercialization of autonomous vehicles.
Our take: GM has a plan for Cruise. That plan is to make Cruise a profitable business.
Waymo Named to TIME100 Most Influential Companies List
On May 30th, Waymo was named to TIME100 Most Influential Companies list for 2024. The most influential companies list first launched in 2021 and Waymo’s assent marks the first time in history that an autonomous vehicle company has been featured. As autonomous vehicle and autonomous truck technologies advance, we expect to see more companies added to the list over the coming years.
Our take: While it’s an honor to be named to the list, that is not the most important aspect of this announcement. It’s the fact that autonomous vehicles are now part of the zeitgeist.
Waymo parent Alphabet is a The Road to Autonomy Index component company
Social Buzz
Amazon Goes Beyond The Visual Line of Sight
Amazon is taking to the skies beyond the visual line of site. On May 30th, Amazon announced the FAA has given the company permission to fly beyond visual line of sight (BVLOS).
This is a big step for Amazon. One that validates their drone technology and moves the company one step closer to achieving their goal of delivering packages with highly autonomous drones in 30 minutes or less. With this approval Amazon will begin ramping up drone delivery operations in College Station, Texas.
Our take: Amazon is one of the most interesting companies working on automation and autonomy today.
Amazon is a The Road to Autonomy Index component company
Pony.ai is Expanding in Beijing
Pony.ai is expanding in Beijing. The company is currently in the process of connecting their robotaxi service to the Beijing South Railway Station. The station is roughly 20 minutes from downtown Beijing. Pony.ai’s expansion is a clear example of China’s ambitions for autonomous vehicles. China is going all-in on autonomy with the hopes of dominating the global market.
Our take: Pony.ai will be able to use this expansion to enhance their business story as they prepare for an IPO in New York.
Pony.ai investor Toyota is a The Road to Autonomy Index component company
Chill, Standard and Hurry
On May 31st, Elon Musk announced Tesla FSD (Full Self-Driving) will have three modes: Chill, Standard and Hurry. How exactly the modes will work and when they will roll out remains to be seen.
Our take: It’s only a matter of time until Tesla cracks full self-driving. Once they do, the rest of the industry excluding Wayve, will have to rethink their approach to autonomous driving. Tesla’s approach is highly scalable with economics that work.
Tesla is a The Road to Autonomy Index component company
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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 May 27th, The Road to Autonomy Index returned 0.10%, the S&P 500 declined 0.51% and the NASDAQ 100 declined 1.44%. The Road to Autonomy Index outperformed the S&P 500 by 0.61% and outperformed the NASDAQ 100 by 1.54%.
Year to Date (YTD), The Road to Autonomy Index has returned 10.46%
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