Platform of the Future
January 21, 2024
This Week in The Autonomy Economy, The Road to Autonomy Index returned 0.17%, Continental AG introduced the platform of the future, Waymo announced that they have applied for a CPUC license to operate a revenue generating fully autonomous vehicle service in LA and Kodiak is preparing to go driverless in 2024.
2024 is off to a great start for the autonomous vehicle and autonomous truck industries. In the autonomous vehicle industry, Waymo continues to be the market leader, as the company gradually expands revenue generating operations in a diligent manner to new cities.
As Waymo expands service to new cities and brings new riders onto the platform, we will be watching Alphabet’s Other Bets revenue which was $1.068 billion with a loss of $6.083 billion in FY22 for insights into Waymo’s revenue growth.
In the autonomous trucking industry, we are watching for further market consolidation around the leaders Aurora and Kodiak.
As we watch for further consolidation we have the following questions:
- What are Daimler Truck’s plans for Torc and what impact will the appointment of Eva Scherer as CFO of Daimler Truck have on the business?
- What is Volvo Autonomous Solutions next move?
- When does Waabi close their Bank of America lead round and at what valuation will the round close at?
- How much financial runway will SoftBank give Stack AV to commercialize their autonomous trucking product?
- When does Waymo get back into autonomous trucking and officially re-open the Waymo Via division?
These are five of the major things that we are watching in the autonomous trucking industry as the year gets underway. It’s going to be a big year for the industry and one were the leaderboard for the next 24 months will be set.
Each and every week we will continue to share our insights into the emerging autonomy economy with you.
As always, thank you for reading and sharing your thoughts with us. We truly enjoy the engagement and the insights.
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What’s Moving the Markets
Platform of the Future
That is exactly what Continental AG has built. Continental might traditionally be classified as a Tier 1 automotive supplier, but there is a lot more to the company that simply being a supplier. Continental will eventually become a platform provider with a services business. This will be possible because of the company’s “From Road to Cloud” strategy.
It is this strategy that will enable Continental to grow earnings, increase free-cash flow and position the company to expand into new business segments and grow others. Such as secure in-vehicle payment processing (software), in-vehicle experiences (software + hardware) and redundant systems for autonomous driving (software + hardware).
During CES 2024, we had the opportunity to tour the Continental booth at CES and meet with members of the company’s C-Suite (thank you, Kirby Howard!) allowing us to further expand upon our research.
What we saw during our tour was the the future of in-vehicle experiences and commerce. Continental has developed the platform to enable developers (perhaps Apple) to create their own bespoke versions of the in-vehicle experience.
We saw the automotive Swarovski Crystal transparent display for premium vehicles. The first thing that came to our minds after seeing the display was Tiffany & Company (LVMH).
Imagine riding in a vehicle that has a Tiffany glass display? What if in the words of Walt Disney, the partnership created a Plus It moment where riders in those vehicles could purchase exclusive Tiffany & Co products? Continental could process the transaction earning a recurring services fee on top of the initial hardware sale.
This scenario would lay the groundwork for Continental creating a services businesses. Services businesses tend to be sticky with high recurring margins. Just no further than Apple, that generated $78.129 billion in services revenue FY 2022. Accounting for 19.8% of all their total fiscal year revenue.
Apple has Apple Pay and Continental could have Continental Pay. A service that is runs in the background very similar to the Visa and Mastercard payment rails.
The company’s commitment to integrated hardware and software is the key to enabling this potential future business line. Continental’s The Road to the Cloud ecosystem could become one of the company’s most important business segments in the future.
Continental’s partnership with Aurora for a hardware-as-a-service autonomous driving platform is a step towards developing a services business. As the program comes online in 2024-2025 and begins to scale in 2026-2027 we will be watching to see what margins the company will be able to achieve and what new potential customers/partners will utilize the service.
Our take: The future is bright for Continental. As the company looks to expand margins and diversify away from their traditional supplier and tires businesses, services is the right business to focus on. Build the platform, enable the services, turn on the recurring revenue spigot.
Preparing to go Driverless
At CES 2024, Kodiak unveiled their Gen 6 (sixth-generation) autonomous truck. This is the autonomous truck that Kodiak will launch fully autonomous operations in Texas on public roads later this year.
Kodiak’s Gen 6 autonomous truck is a fully redundant truck that was built for driverless operations. These trucks will utilize Ambarella CV3-AD685 SoC (system-on-chip) AI domain controls. The SoC will support Kodak’s multi-sensor perception, fusion and path planning – running neural networks while processing multiple cameras, LiDARs and radars.
Kodiak has been preparing to go driverless for years. In 2024 that will become a reality. We will be watching Kodak’s progress as the company prepares for driverless commercial operations later in the year.
On March 14, 2023, Don Burnette, Founder & CEO, Kodiak Robotics joined us on The Road to Autonomy podcast to discuss building an autonomous trucking business and why Kodiak did not SPAC.
Not taking the SPAC route could turn out to be one of the best business decisions that Don and the Kodiak board has ever made. As we have all witnessed the SPAC bubble burst.
Listen to our conversation with Don Burnette today on The Road to Autonomy, Apple Podcasts and Spotify.
Our take: 2024 is a big year for Kodiak.
Tele-Driving in Vegas
On January 17th, Vay officially launched its commercial tele-driver service in Las Vegas. During CES, we had the opportunity to meet with the Vay executive team, experience the service and dive into their business model.
The Vay model is different from most of their competitors as they have embraced a tele-driving model that compliments the existing rental car business by enhancing the overall rental experience.
No more having to jump on a shuttle to find the rental car stand, or having to drive to your local car rental company, now the vehicle will simply be delivered to you by a tele-operator. When you take possession of the vehicle, you simply drive away.
It’s technologies like this that are laying the foundation for the future of mobility. The future of mobility will be defined by convenience and experiences.
Last year, Thomas von der Ohe, Co-Founder & CEO joined us on The Road to Autonomy podcast — June 6, 2023 where he discussed Vay’s tele-driving first approach to autonomy. The episode offered insights into their European business and how Thomas views tele-driving complimenting autonomous vehicles.
Listen today on The Road to Autonomy, Apple Podcasts and Spotify.
Our take: The Vay business model is compelling and one that has many potential use cases as the business scales.
Social Buzz
Undermining and Underperforming
One must ask the question; Why? If you are positioning Tesla as an AI company and highlighting the potential of Dojo becoming a potential new business, why send this tweet? It only further ignites the fire leading shareholders to question the motive behind the comments.
This year, Tesla’s stock is underperforming the market by 16.05%. Tesla’s stock is down 14.58% YTD while NVIDIA, the market’s pure-play AI company is up 23.51% YTD. NVIDIA is outperforming the market by 22.04% YTD.
Ryan Brinkman, Lead Automotive Equity Research Analyst, J.P. Morgan offered the following on the tweet in a January 16, 2024 research note.
We are highly uncertain of how this may play out but still view the events negatively for Tesla shares for several reasons, including: (1) the odds of a CEO departure appear to have risen, with clear negative implication for the shares (2) the cost to non-Musk shareholders of avoiding such a fate now appears higher than imagined; and (3) the manner in which investors are learning of these details could cause them to question corporate governance issues.
– Ryan Brinkman, Lead Automotive Equity Research Analyst, J.P. Morgan (Excerpt from a January 16, 2024 research note)
Mr. Brinkman is correct to highlight these issues. These are issues that Tesla’s board is going to have to address over the coming quarters. He currently has an underweight $218.89 price target on Tesla.
Our take: Mark Twain once said “It’s better to keep your mouth shut and appear stupid than open it and remove all doubt.”
Tesla is a The Road to Autonomy Index component company
Expanding Connectivity to Rural Farms, Enabling Autonomy
On January 16th, Deere & Company announced it has entered into an agreement with SpaceX’s Starlink to provide satellite communications service to farmers. The foundation for this deal was put in place in 2022, when Deere put out an RFP for SATCOM connectivity.
Prior to announcing the deal, Deere tested the satellites for roughly eight months according to The Wall Street Journal. Starlink was ultimately chosen because of the speeds it’s low-orbiting satellites offered Deere.
The service will initially be available through a limited release in the United States and Brazil starting in the second half of 2024 according to Deere.
For Deere to take the next steps in precision, on the way to autonomy in Brazil and elsewhere, a reliable connection is necessary. Currently Deere relies on WiFi (in the barn) and Cellular (on the field); in many cases that doesn’t allow for the high-speed data connection growers need even if it’s available. Separately, Starfire while decent for tasks like AutoSteer (AutoTrac) it doesn’t have the same high data transfer abilities that would enable autonomy where there’s a return path.
– Adam Seiden, CFA, Director, Equity Research – Machinery, Engineering, Construction, & Construction Materials, Barclays (Excerpt from A Potential Foundational Step Forward: Starlink & Deere research note – January 15, 2024)
Starlink will unlock the data speeds needed for Deere to expand their autonomy offerings to remote farms with limited to no connectivity.
Our take: Deere is one of the most important companies in autonomy and in our opinion, they are merely just getting started. When Deere deploys autonomy at scale, shareholders will be rewarded. Deere has one of the best track records when it comes to buying and integrating new technologies; Blue River Technology — See & Spray and Bear Flag Robotics — autonomous tractors.
Starlink is only going to accelerate Deere’s autonomy ambitions.
If you are interested in learning more about Blue River Technology and Bear Flag Robotics, we would recommend the following The Road to Autonomy podcasts.
- Optimizing Farms with See & Spray, A Conversation with Lee Redden, Chief Scientist & Co-Founder Blue River Technology and Chief Scientist of the Intelligent Solutions Group at John Deere (August 19, 2021)
- Nothing Runs Like an Autonomous Deere, A Conversation with Igino Cafiero, CEO & Co-Founder, Bear Flag Robotics (December 20, 2022)
Deere & Company is a The Road to Autonomy Index component company
Waymo’s The Squaw Man Moment
On January 19th, Waymo announced that they have applied for a CPUC license to operate a revenue generating fully autonomous vehicle service in LA. Once Waymo brings LA online, it will be interesting to watch as they expand the ODD (operational design domain) from the West Side of LA to LAX and eventually Dodger Stadium.
Being able to take a Waymo from the West Side of LA to watch Shohei Ohtani and The Dodgers triumph over the NL West and the rest of National League will be an Only in LA moment.
Once that is accomplished, connecting to LAX and eventually Disneyland (36.8 miles) the Only in LA experience will be complete. To top it off, why not mix in the ability to handle drive-throughs? Could you imagine a Waymo vehicle waiting in line at In-N-Out ? The seeds for an Only in LA moment are being planted.
Our take: When Cecil b Demille first came went to Hollywood in the early nineteen hundreds, the movie business was nascent and had yet to find its stride. That all changed when Cecil b Demille directed The Squaw Man in 1914. The Squaw Man was the first full-length feature film shot in Hollywood.
Waymo first came to LA (Hollywood) in 2023 and in 2024 they will be opening the service to paying customers. This is their The Squaw Man moment. A new industry is about to emerge in LA (Hollywood) as the future of autonomy will be defined by experiences and convenience.
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 January 15, 2024, The Road to Autonomy Index returned 0.17%, the S&P 500 returned 1.17% and the NASDAQ 100 returned 2.26%. The Road to Autonomy Index underperformed by the S&P 500 by 1% and underperformed the Nasdaq 100 by 2.09%.
The top performing stocks in The Road to Autonomy Index this week were:
- Qualcomm returned 9.30%
- NVIDIA returned 8.74%
- Munich Re AG returned 5.13%
S&P Dow Jones Indices is the custom calculation agent for The Road to Autonomy Index.
Follow The Road to Autonomy Index on Google Finance
The Road to Autonomy Index Component Companies
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.
Driverless in Sun City
Edwin Olson, CEO & Co-Founder of May Mobility joined The Road to Autonomy podcast to discuss going driver-out in Sun City, Arizona and the economics of the business.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, January 16, 2024
May Mobility investor Toyota is a The Road to Autonomy Index component company
Developing the Autonomous-Ready Truck Platform
Joanna Buttler, Head of the Global Autonomous Technology Group, Daimler Truck North America joined The Road to Autonomy podcast to discuss the development of the autonomous-ready Freightliner Cascadia and Daimler Truck’s outlook for autonomous trucking.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, January 9, 2024
Daimler Truck AG is a The Road to Autonomy Index component company
Scaling an Autonomous Trucking Company with Financial Discipline
James Reed, COO, Kodiak Robotics joined The Road to Autonomy podcast to discuss how Kodiak is scaling the business with financial discipline, economic scenario planning and operational readiness as the company ramps up commercial operations heading into 2024.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, January 2, 2024
Subscribe to This Week in The Autonomy Economy™
A weekly newsletter featuring insight and analysis 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.
Inclusion of a security within The Road to Autonomy Index® is not a recommendation by The Road to Autonomy Indices LLC to buy, sell, or hold such security, nor is it considered to be investment advice.
